Ch. 40R incentive funding runs short

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Since the inception of Chapter 40R – the “smart growth” zoning incentive program – a few years ago, cities and towns across the state have actively engaged in developing much-needed affordable and market-rate housing units under its framework.

More than 5,600 units in 15 cities and towns have been zoned and approved under Chapter 40R. Another five communities are seeking approval of 40R plans that would zone an additional 2,000 to 2,400 units. Five others have applied for or have received state grants to pursue 40R projects for more than 1,000 additional housing units. And nearly 20 other communities are considering 40R development initiatives, from Nantucket to Williamstown.

These results are on pace to eventually eclipse the rate of affordable and market-rate housing developed under the state’s affordable housing statute, Chapter 40B, which has produced 48,289 total units (54 percent of which are affordable) in 884 developments since its inception nearly four decades ago.

While municipalities are electing to use the new 40R framework, which requires concentrated development in 40R districts, the incentives to communities promised under the statute are jeopardized by a lack of funding provided by the state.

The Department of Housing and Community Development reports that less than $190,000 remains in the 40R Trust Fund, with one community in line to receive nearly $75,000 of that amount shortly.

Of the 15 cities and towns who have received state approval, only nine have received their up-front zoning incentive payments, meaning the Trust Fund is already oversubscribed by $2.23 million.

Assuming that pending applications from the other five cities and towns are approved by the state, the Trust Fund would be oversubscribed by nearly $2 million more – or more than $4 million total. These amounts do not account for any density bonus payments that come due for any of these 40R developments.

The governor’s office has proposed to transfer $15 million to the 40R Trust Fund for the payment of incentive and density bonuses, a proposal supported by the MMA.

While such a transfer would meet the state’s current obligations under 40R, a reliable and stable revenue source would be necessary in order to guarantee the incentives in the future.

Cities and towns have little reason to proceed further with 40R projects unless there is a credible plan for providing incentive funding under the program and its sister statute, Chapter 40S, which provides assistance to offset educational costs associated with 40R development.

Chapter 40R was enacted by the Legislature and signed into law in the summer of 2004. Under the program, municipalities that adopt an overlay zoning district in areas of concentrated development or near public transit are eligible to receive various financial incentives.

Written by Administrator